Pilgrim's Pride bankruptcy leaves farmers holding the bag for mortgages on huge chicken houses

"A chicken housing crisis has cropped up in the U.S., and it's producing some of the same bleak results as the human one -- foreclosures, lawsuits and devastated homeowners," reports Lauren Etter of The Wall Street Journal. It's the result of the bankruptcy of the Pilgrim's Pride chicken company, which canceled contracts with at least 300 farmers in Arkansas, Florida and North Carolina, in areas where processing plants were closed or cut back.

"Under these contracts, farmers receive a set price per pound for raising chicks supplied by Pilgrim's until they are ready for slaughter. The company turns the birds into nuggets, wings and other food," Etter explains. "Pilgrim's still has contracts with more than 5,000 growers nationwide, and executives say they are trying to cut as few as possible. "Chicken houses without chickens or contracts have virtually no resale value," Etter notes. "And with the poultry industry in retreat, rival producers aren't looking for new growers."

That makes the mortgages unpayable, and the mortgages are big. A chicken house can cost more than $200,000, and it's typical for a farmer to have several. "In Arkansas, 74 chicken farms have banded together to sue Pilgrim's," Etter writes. "In their lawsuit ... the farmers say company representatives induced them to build chicken houses by making promises like their 'grandkids will have chickens,' according to court documents." (Read more)